Abkhazia Now Craves Investors’ Recognition

APAbkhaz residents rallying with Abkhaz flags around an empty pedestal on Sukhumi's Freedom Square on Aug. 21.
Abkhazia is looking to attract investors with sandy beaches, 220 days of sunshine every year and an airport that once served as a backup landing pad for the Soviet space shuttle.

“We are ready to talk to any country, organization or firm,” Abkhaz leader Sergei Bagapsh said.

Abkhazia and another republic, South Ossetia, broke away from Georgia following the Soviet collapse. Abkhazia has lived in poverty and oblivion after winning de facto independence in a 1992-93 war against Georgia, with no county agreeing to recognize it.

Abkhaz residents said Russia’s decision on Aug. 26 to recognize Abkhazia’s independence gives them a long-sought opportunity to revive their lush region on the Black Sea coast as a top tourist destination.

Scars from the 1990s war are everywhere and become more visible closer to the capital, Sukhumi, where whole apartment blocks stand gutted like in South Ossetia’s capital, Tskhinvali, where fighting ended only a month ago. Sukhumi’s ruins have stood untended for 15 years.

“Nobody wants to invest when there is instability,” said Zurab Marshan, deputy chief of staff for the Abkhaz government. “Even our compatriots in Moscow have been waiting, not wanting to invest.”

Local officials said they had neither the money nor the materials to reconstruct buildings or build new ones, and some families are living in damaged homes.

“Reconstruction is not going easy,” Bagapsh told foreign and Russian reporters on a recent Kremlin-organized tour of the two republics.

“The most important thing for us is to fix schools and hospitals,” said Leonid Lakerbaya, a senior Abkhaz official.

He said only three schools had been reconstructed over the past 15 years. “The other 174 are in an awful or semiawful state,” Lakerbaya said.

The war and subsequent sanctions have all but squashed Abkhazia’s investment opportunities, and catching up with prewar levels promises to be difficult.

Three million tourists a year used to visit the region before the war. “That’s a number that Abkhazia can only dream about now,” said Sharova, a tour guide with the Gagra Travel Bureau, a local agency.

No one keeps figures now for tourists, many of whom are Russians and slip over the border from the nearby Krasnodar region. Sharova estimated that 1 million tourists now vacation here every year.

Sukhumi’s airport used to handle 37 international flights before the war. The only international flights these days are the occasional Russian cargo plane carrying humanitarian aid.

But the airport is still “super,” Lakerbaya said.

Under the Soviets it was designated as a backup landing pad for the Buran shuttle, and SAS Scandinavian Airlines in 1994 expressed interest in using it as a stopover on flights between Europe and Africa, he said.

An immediate task is to launch air links with Russia, and the 2014 Winter Olympic Games in nearby Sochi might provide business opportunities for the region, too, Lakerbaya said.

Industrial enterprises are rare in Abkhazia, which resembles a giant, overgrown garden. Officials hope that tourism, transportation and agriculture will become the region’s economic drivers.

With its 220 days of sunshine each year and an average temperature of 22 degrees Celsius, Abkhazia grows tangerines, kiwis, figs, tea, pineapple guava, eucalyptus and tobacco.

Bagapsh said he expected that investment would grow from near nothing to 10 billion rubles ($400 million) by 2011, but that more was needed.

At the same time, officials warned that they do not want heavy industries or polluting factories. “We wouldn’t want to turn Abkhazia into a giant construction site,” Lakerbaya said.

The drive for economic and political independence in Abkhazia, with a population of 300,000, stands in sharp contrast to South Ossetia, a republic of 70,000 people that wants to join Russia. South Ossetia is rich in mineral resources but has few industrial enterprises, raising huge questions about the sustainability of its economy. An estimated 60 percent of its revenues come from Russia, which has promised to pump $1 billion into reconstruction after the brief war with Georgia last month.

The annual budgets for South Ossetia and Abkhazia are comparable in size. Not including the reconstruction subsidies, South Ossetia’s budget for this year is 2 billion rubles, said Irina Gagloyeva, head of South Ossetia’s press and information committee.

Abkhazia’s budget for this year is 1.7 billion rubles and it is expected to reach 2.8 billion rubles next year, local administration officials said. In 1994, the budget was 446 million rubles.

“We’ve started making money on tourism and agriculture,” Lakerbaya said. “In three to four years everything will be fine.”